A New Form of Capitalism

At present, assistance for people currently employed to brush up their skills is provided primarily through companies. Within roughly five years, we will expand assistance that individuals can access directly.
Also, with regard to the employment adjustment subsidy, we will review the subsidy rate and other relevant elements so that it becomes easier to choose employment adjustments through education and training rather than through leaves of absence. Towards that end, we will follow up on the policy package to encourage investments into people and conduct a review of those policies.

We will outline, among other topics, examples of the purpose of job-based pay in hiring human resources at Japanese companies, methods of deploying, cultivating, and evaluating human resources, reskilling methods, wage systems, and the relationship between changes in working conditions and current legislation and judicial precedents and within 2023 compile them into a collection of case studies that will serve as a reference for individual companies introducing the system.

To facilitate labor mobility into growth fields, we will review the requirements for receiving unemployment benefits so that such benefits can be received promptly even in cases in which workers leave their jobs at their own discretion. We have also revised the Model Rules of Employment to enable a review of labor practices such as reducing the amount of severance pay in cases of voluntary resignation. We will also conduct a review of the system for taxing retirement income.

This year’s rate of wage increases was the highest in roughly 30 years. In order to maintain and expand this trend, we will prepare an environment in which small- and medium-sized enterprises can raise wages, increase the minimum wage, promote improvements in the treatment of non-regular employees through comprehensively enforcing the system of equal pay for equal work and undertaking necessary system reviews. We will also work to increase household income by raising wages levels across Japan as a whole.

While promoting a shift within households from savings to investments, we will aim to realize stable asset formation, centered on the middle class. Over the long term, we will also work to double the income derived from managing assets.
We will undertake a major expansion of NISA and transition it to a permanent system, specifically by making permanent the period for which accounts can be opened, raising the limit on the annual amount that can be invested tax-exempt (the limits of 1.2 million yen in ordinary NISAs and 400,000 yen in regular investment NISAs will rise to limits of 2.4 million yen in the growth investment portion and 1.2 million yen in the regular investment portion, for a total of up to 3.6 million yen), and making the tax exemption period unlimited, among other changes.

Alongside our three-pronged set of labor market reforms, we will build a safety net for employment that supports diverse ways of working so that a wide array of human resources can make the greatest possible use of their capabilities as they work.
Specifically, we will work to promote dual employment and second jobs and popularize a system in which workers enjoy the option of having three days off each week.

Bills on GX (the Green Transformation Promotion Act and the Act on Power Sources for Green Transformation and Decarbonization) were enacted in May 2023.
These bills aim to bring about public and private investment in GX at a scale of 150 trillion yen over the next decade, working towards achieving a 46% reduction in greenhouse gas emissions in fiscal 2030 (compared to fiscal 2013 levels) and carbon neutrality by 2050. Through this, we will create new demand and markets in the areas of stable energy supply and decarbonization, leading to a reinforcement of the Japanese economy’s industrial competitiveness as well as to economic growth.

(Promoting the introduction of renewable energies)
Taking S+3E* as a major premise, we will, while maintaining harmony with local communities, work to introduce renewable energy to the greatest possible extent under the principle of giving it highest priority as a major power source.
Specifically, we are working to accelerate the development of the power grid to accommodate more widespread use of renewable energy, make investments to expand the introduction of storage batteries for power grids, and provide assistance for introducing renewable energy.
*S+3E is the fundamental principle underlying Japan’s energy policy, in which a balance of energy security, economic efficiency, and environmental sustainability (3E) is maintained, undergirded by the major premise of safety (S).

(Using nuclear power)
Taking as major premises the assurance of safety and the understanding of local communities, we will press forward in restarting nuclear power plants, extending their operating periods for a certain length of time, and developing and constructing next-generation advanced reactors. The policy of having the Nuclear Regulation Authority, which has a high degree of independence, regulate in a strict manner will remain unchanged into the future.
Japan will also, with the national government acting in unison, advance measures towards final disposal, under the responsibility of the national government.

(Getting hydrogen and ammonia used in practice in society)
In addition to preparing the foundations for using hydrogen energy, one of Japan’s areas of strength, we will press forward in quickly preparing support systems focused on the price differences between hydrogen and fossil fuels and other measures.

(Promoting the electrification of automobiles)
In order to achieve the target of so-called electrified vehicles (battery electric vehicles, fuel cell vehicles, plug-in hybrid vehicles, and hybrid vehicles) accounting for 100% of new passenger car sales by 2035, we will work to intensively introduce clean energy vehicles by providing subsidies for their purchase and developing electric charging and hydrogen filling infrastructure.

(Pursuing the Long-term Strategy as a growth strategy based on the Paris Agreement)
A Long-term Strategy was formulated to lay out Japan’s vision for achieving carbon neutrality by 2050, based on stipulations under the Paris Agreement.
It sets out Japan’s fundamental approach that measures to combat climate change are not restraints on economic growth, but rather will become the key for bringing major reforms to society and the economy, stimulating investment, improving productivity, and giving rise to substantial transformations of the industrial structure while spurring robust growth.

(Achieving decarbonization in local areas)
We will promote local area decarbonization that contributes to regional vitalization, which enhances the attractiveness and the quality of local communities. We will pursue this through the creation of leading decarbonization local areas, projects to accelerate the implementation of priority measures, and other initiatives.

(Promoting sustainable finance)
Aiming to realize carbon neutrality in 2050, we will work to attract both domestic and international environmental investment funds said to amount to 3,500 trillion yen. We will create a financial market framework towards that end and work to upgrade Japan’s functioning as a green international financial center.

In order to promote the transition to new industrial structures and ensure sustained growth, based on the Five-Year Plan for Promoting Startups formulated in November 2022, we will lower the barriers for new participants as well as for those taking on challenges once again and foster an environment in which startups are able to grow.
Aiming at the target of expanding the amount of investment into startups to a scale of more than tenfold in fiscal 2027, we will advance our measures focused on the three pillars of (1) fostering human resources and building networks that facilitate the creation of startups, (2) strengthening the supply of funding for startups and diversifying exit strategies, and (3) promoting open innovation.
Specifically, for example regarding stock options,* we will improve their user-friendliness in order to advance their further use domestically. Towards that end we will adopt measures within the corporate legal system and also conduct a review of the taxation system to make it startup-friendly.
*Stock options are a system for granting executives or other employees the right to acquire shares of their own company at a price decided in advance.
We will further stimulate public welfare activities led by the private sector, including support measures for impact startups, and promote measures being undertaken by public interest corporations and others to address social issues.

We will bring about sustained growth by transforming social issues into engines for economic growth through investments in science, technology, and innovation.
In the fields of AI, quantum technology, health and medicine, fusion energy, and biomanufacturing, we will dramatically expand our investments in science and technology through public-private cooperation to reemerge as a powerhouse in science and technology.

In order to ensure a V-shaped recovery in tourism leading up to 2025, we will, based on the Action Plan for Expanding Inbound Tourism for the New Era, aim to transcend conventional tourism to restore international exchanges taking place in Japan and firmly establish opportunities for “international brain circulation.” We will also deepen our measures across a wide range of fields, including business, education and research, and culture, the arts, and sports.

Taking the three guidelines for digitalization as our fundamental principles, we will steadily promote the digitalization of public administration throughout the entire government, with a view to facilitating the formation of a digital society that contributes to realizing the sustainable and sound development of the Japanese economy and to citizens leading lives of well-being.

Harnessing the power of digital technology in all respects, we will change to a system in which the national government supports local areas through digital technology in order to provide each individual with well-tailored services in a speedy manner.
We will work to ensure the security and reliability of the My Number system and My Number cards, the passports for a digital society. Given that My Number cards have now spread to almost all of the public, we will also improve My Number cards’ convenience and functions, including expanding the various areas in which they can be used.

The vision for a Digital Garden City Nation seeks to use digital technologies to revitalize local areas and achieve a sustainable economy and society while making active use of characteristics particular to individual areas. Aiming to create a society in which all people anywhere in Japan can live their lives with convenience and comfort, we have accelerated the efforts for regional vitalization underway until now by leveraging the power of digitalization. We will also promote the formation of local living areas that integrate the digital with the real and enhance both transportation and digital networks, working towards the realization of national land that connects regional strengths in a new era. In so doing, we will develop the vision for a Digital Garden City Nation into the formation of our national land.

We will approach artificial intelligence (AI) consistent with the three pillars of promoting the use of AI, addressing risks, and strengthening our development capabilities. It is important to guard against the improper use of AI and utilize AI that is trustworthy and keeps humankind at the center. Under the Hiroshima AI Process, which Japan established during its G7 Presidency, we will manage risks while deepening international discussions leading towards trustworthy AI.